CTG Newsletter – 18 December 2017

Tax Conference 2018 – Save the date!

CTG is pleased to confirm that next year’s Tax Conference is scheduled take place on Tuesday 15 May 2018, at the Wellcome Trust. Information about the programme and speakers, as well as registration details, will follow in the new year.

CTG would welcome feedback from members on previous events and any suggestions for speakers or topics at next year’s Conference via the comment box here or by e-mail to info@charitytaxgroup.org.uk

VAT and charity advertising

As highlighted in an earlier newsletter, CTG has become aware of potential HMRC challenges to the applicability of the VAT zero rating for advertising on third party platforms, particularly via social media. The argument advanced is that advertising of this nature is too targeted at individual browsers to meet the zero rating criteria.

Over recent months CTG has liaised with charities and advertisers, including their technical staff, and has considered the reasons as to why this may be incorrect. CTG has met with HMRC to make this case and has secured its agreement to review the issue with a view to setting clear policy objectives which they will then communicate with the sector. We hope that their views will be expressed within a period of around three months from now.

It appears that, in the meantime, certain agencies and advertising providers are taking the cautious view that the relief  does not apply to any advertising of that kind. Whilst that is understandable, we believe that charities should not assume that the issue is settled and should reserve their position with the supplier rather than simply accepting it. How this is achieved will depend on the relationship with the supplier.

We hope to provide greater clarity on the point in a few months’ time. Meanwhile, examples of charity experiences of this situation can be sent to us at info@charitytaxgroup.org.uk and we would welcome this information. However, we believe it is best at this stage not to debate the issue openly before HMRC’s review has been completed.

Scottish Draft Budget 2018-19

The Scottish Government has published its Draft Budget for 2018-19, which includes proposals to set new Scottish rates of income tax and a response to the Barclay Review of non-domestic rates

Income tax rate bands

The Government has stated that the income tax proposals should mean that those earning under £33,000 will pay less income tax in 2018-19 than in 2017-18, with higher earners paying proportionately more.

The new scheme will have five bands instead of three, with the higher and top rates each being increased by 1 percentage point, as follows:

As Gift Aid is administered by HMRC and operates on a UK-wide basic rate basis, it remains unclear how this will operate going forward. CTG and other sector bodies has undertaken planning work with HMRC and HMT officials, with this eventuality in mind and various options for operating Gift Aid have been considered. CTG will be discussing the matter with officials shortly and will keep members posted on developments.

Barclay Review of non-domestic rates

The Scottish Government has also accepted all the remaining recommendations from the Barclay review of non-domestic rates, with the exception of the removal of entitlement to charity relief  for certain university properties and for ALEOs. This will mean that charitable business rates relief will be removed for private schools in Scotland (from 2020), although the review makes no comment on their overall charitable status.

Round-up of other topical developments

• Trusts Registration Service webinar: HMRC has published slides from a recent trusts online meeting about the new Trust Registration Service (TRS) [NB e-mail registration required]. More detail on the TRS can be found here. If you’ve used the service we would welcome your feedback at info@charitytaxgroup.org.uk. A wide range of other helpful HMRC tax webinars (geared at advisors and agents) can be accessed here.
• Common Reporting Standard: CTG Observer Member, Crowe Clark Whitehill (CCW) has recently gained clarity from HMRC regarding some Common Reporting Standard (CRS) advice which may impact a number of non profits. HMRC has just amended the advice  they previously provided to CCW, and potentially others, on the definition of Income attributable to investing, reinvesting or trading in financial assets for the 50% financial assets test. They have at the same time confirmed that donations into expendable and permanent endowment funds can be part of Gross Income for the purposes of this test. You can read the full CCW update here.
• Taxation of employee expenses: HM Treasury has published a summary of the responses received during its call for evidence on potential areas for reform in the taxation of employee expenses. Following feedback from stakeholders Government is not planning major reform of the current system, but it has committed to the following proposals:
  • publishing a consultation in 2018 on extending the scope of tax relief currently available to employees (and the self-employed) for work-related training costs
  • removing the requirement for employers to check receipts when making payments to employees for subsistence using benchmark scale rates from April 2019
  • placing the existing concessionary accommodation and subsistence overseas scale rates on a statutory basis from April 2019
  • working with external stakeholders to explore possible improvements to the guidance on employee expenses, particularly on travel and subsistence, and the process for claiming tax relief on non-reimbursed expenses.
• HMRC Employment Tax Bulletin: The December 2017 Employer Bulletin includes:
  • A summary of relevant Budget announcements and Finance Bill provisions
  • Details of improvements to the Apprenticeship Service
  • Notice that from 21 December 2017 the Disclosure of Tax Avoidance Schemes (DOTAS) rules will apply to the Apprenticeship Levy. DOTAS requires a person, usually the person who designs or sells an avoidance scheme to disclose details of the scheme to HMRC.
• Civil Society: Four Ministers have given evidence before the House of Lords Citizenship and Civic Engagement Committee regarding the Government’s approach towards citizenship and civic engagement. In particular, the Committee looked at three strategies being pursued by the Government on democratic engagement, integration and civil society. Minister for Sport and Civil Society Tracey Crouch said that the civil society strategy was the result of conversations with the charity sector and would be formally announced in January, alongside a public consultation.
• Independent examiner’s report template for charity accounts: The Charity Commission has published the template to be used by independent examiners for charity accounts, as part of its receipts and payments accounts pack (CC16).
• Lotteries: The Gambling Commission has introduced new requirements for lotteries, aimed at making it easier for consumers to understand where the money raised is going. From 4 April 2018 all lotteries will have to:
  • make it clear to consumers before they buy a lottery ticket exactly which society or charity the lottery proceeds are going to
  • publish what proportion of money raised from lottery ticket sales in the previous year was returned directly for the purposes of the society.
• Digital Economy: HM Treasury has published a position paper setting out the Government’s view on the challenges posed by the digital economy for the corporate tax system and its preferred solutions. The deadline for comments is 31 January 2018.

Get involved

CTG members are encouraged to

• Join the new Business Rates working group
• Join the Gift Aid practical issues working group in 2018 – read why here!
• Help us to improve the Gift Aid donor benefits guidance – submit feedback here
• Share their experience of a practical or technical charity tax issue by writing a commentary
• Share their feedback on how their charity has been affected by the Apprenticeship Levy so far (e.g. cost so far, amount of levy used or expected to be used) – send comments to info@charitytaxgroup.org.uk. The House of Commons Library has published an interesting new analysis on the apparent drop in numbers of new apprenticeships since the introduction of the Levy.

CTG Newsletter Archive

Members can catch up on CTG’s recent newsletters using the links below:

• CTG Newsletter – 13 December 2017
• CTG Newsletter – 8 December 2017
• CTG Newsletter – 4 December 2017
• CTG Newsletter – 30 November 2017
• CTG Newsletter – 24 November 2017
• CTG Budget Update – 22 November 2017
• CTG Newsletter – 21 November 2017

CTG’s VAT case law tracker has also been recently updated.

Expert Commentaries

Read our expert commentary pieces and leave your comments and queries:

• VAT case relating to ‘single supply’ and zero rated printed material (Graham Elliott)
• Corporate Criminal Offence – implications for charities (Ian Short and Tania Dimitrovich-Archer)
• Definition of a ‘sport’ for VAT purposes – English Bridge Union case (Graham Elliott)
• Relevant Residential and Relevant Charitable buildings: Clawback provisions – Balhousie Holdings case (Graham Elliott)
• Proposed new penalties for participation in VAT fraud (Edd Thompson and Juliet Bailey)
• Summary of recent VAT cases on partial exemption, sports supplies & charitable annexes (Graham Elliott)
• Benefits of joining the CTG Gift Aid practical issues working group (Keren Caird and Donna Perry)
• Iberdrola VAT case – Implications for Sveda? (Dermot Rafferty)
• Is a CASC a Charity (for Tax Purposes)? (Graham Elliott)
• Charity VAT Recovery – The Road Not Taken (Graham Elliott)
• VAT recovery for holding companies – MVM case and HMRC guidance (Dermot Rafferty)
• Professional negligence and failed tax avoidance schemes (Sonia Ferreira)
• Definition of a ‘sport’ for VAT purposes – new AG opinion (Graham Elliott)
• Business rates valuations for museums (Colin Hunter)
• First experience of submitting a Common Reporting Standard (CRS) return (CTG)
• Construction of Relevant Charitable Purpose (RCP) buildings – position of sub-contractors (Les Howard)
• Supplies to local authorities – Healthwatch Hampshire VAT case (Graham Elliott)
• Brockenhurst College VAT case – implications for charities (Graham Elliott)
• Filing charity trading subsidiary tax returns and charity accounts (Justin Bevan)
• Adecco appeal on the VAT treatment of temporary workers dismissed (Graham Elliott)
• Have you paid enough tax to cover your Gift Aid donations? (Kevin Russell)
• Off-payroll working: Major changes from April 2017 (Susan Ball)
• Update on “Economic Activity” and the fate of the Lord Fisher test (Graham Elliott)
• Durham Cathedral VAT case and Sveda – implications for charities (Graham Elliott)
• Hire fees for stalls at fairs – implications of the Kati Zombory-Moldovan case (Graham Elliott)
• Common Reporting Standard – Top 10 tips for charities (Alana Petraske)
• Charity Authorised Investment Fund (CAIF) launched (Grania Baird)
• Longridge on the Thames VAT case – implications for charities (Graham Elliott)
• Implications of Brexit for charity tax (John Hemming)
• Implications of the Hallé case for the philanthropic exemption (Graham Elliott)
• Helping you find your way – the new Charity Tax Group website (John Hemming)

Please contact us at info@charitytaxgroup.org.uk if you would be interested in contributing a commentary piece.

CTG website and newsletters

Charity and Observer Members are reminded that their membership is on an organisational basis and that there is no limit of the number of subscribers to the website per organisation. If you think a colleague would benefit from getting access to the website and newsletters directly, please encourage them to register online at www.charitytaxgroup.org.uk/join-us/ selecting your organisation from the drop-down box.

Charity Tax Group change of bank details

A reminder that CTG’s bank details have now changed and should be used for all transactions going forward.

A letter on headed paper, confirming the changes can be downloaded at https://www.charitytaxgroup.org.uk/wp-content/uploads/Charity-Tax-Group-–-Change-of-Bank-Details.docx and there is notification of the change on the website here.

If you require any additional information or would like to discuss this further, please contact us at info@charitytaxgroup.org.uk or on 020 7222 1265.

We are very grateful to all members that have made a financial contribution towards our work in 2017 – this has been vital in ensuring we can continue to represent your interests to Government on important charity tax related issues. Donation forms will be circulated in early 2018 and we hope that you can continue to support our work.